The Interagency Council on Affordable Housing said most of the state's housing services and funding programs should be folded into the department, creating one stop for developers and residents seeking services.

That would mean transferring staff and funding from state Department of Economic and Community Development to the new department. Myriad services offered by the Department of Social Services, such as rental assistance and emergency shelters, would also be transferred.

"Creating affordable housing and economic development are linked. It's the right thing to do to and a smart thing for Connecticut's future," said Catherine Smith, community development commissioner and a member of the interagency council charged with making recommendations.

James Dunn, a nonprofit housing developer who has built affordable housing in Danbury and New Milford, said the state's major funding source for housing, the Connecticut Housing Finance Authority, should also be folded into the new department.

"I see this as a good first step, but it misses a chance to be a great first step. You can't do that and leave CHFA out of the mix. There needs to be strong effort to incorporate them into the mix," Dunn said.

A 44-page report by the interagency council highlighted the state's housing problems, pointing out that the number of renters paying more than 30 percent of their income for housing has risen from 36 percent to 52 percent during the last 10 years.

The council said that only 30 Connecticut communities have adequate affordable housing and Connecticut has the sixth-highest "housing wage" in the nation because renters must earn over $23 per hour to afford a typical two-bedroom apartment.

"The lack of sufficient affordable housing throughout the state also limits the ability of low-income individuals and families to move to communities where they can take advantage of job and educational opportunities," the report explained.

State Rep. Patricia Miller, D-Stamford, said the formula used to determine what is considered affordable is "reducing housing stock. We are losing housing stock for low income and moderate income families."

"We are aware affordability varies across the state. I do hear and understand what you are saying. There is always tension over where you set that threshold. You can target very low income and not get to folks with low income. And you can set it too high," Foley said.

Betsy Crum, director of the Connecticut Housing Coalition, praised the new department. "The recommendations represent an important step forward in respect to creating and providing access to affordable housing."

"The systems have been fragmented for years. The new department can transform how housing is accomplished and become a one stop for housing services," Crum said.